WRAPUP-Sluggish economies weaken business jet sales
By Alwyn Scott and Allison Lampert
LAS VEGAS Nov 18 (Reuters) - Weakening or sluggish economies around the globe are taking a toll on business aircraft sales and prices, forestalling an incipient recovery that had raised the hopes of plane makers and suppliers.
Manufacturers attending the industry's largest jamboree this week predicted flat or lower sales next year, and possibly in 2017, before the arrival of new models stirs interest and buying later in the decade to restart industry growth.
Prices also are falling. When buying last peaked in 2008, a new Bombardier Global 5000 aircraft, a so-called "super large" jet, cost about $52 million. "Now you can get the same aircraft with a better cockpit for $43 million, almost $10 million less," said Chad Anderson, president of Jetcraft, a major aircraft broker.
Such discounts are distorting the market and even affecting used aircraft prices, said Richard Aboulafia, an analyst at the Teal Group.
Amid the weakness, Bombardier scaled back production of Global 5000 and long-range Global 6000 planes. Buyers are more cautions about big plane purchases and more used planes are on the market, industry experts said.
Anderson said he expects Gulfstream will have to slow production of some of its G450 and G550 planes, also considered "super large" jets. Gulfstream said it is "evaluating 2016 production rates right now" and will announce them in late January.
Even companies positioned with better-selling light and mid-sized jets have concerns. "2016 will be a challenge," said Marco Tulio Pellegrini, chief executive of Embraer Executive Jets, which has seven models mostly in the small and mid-size categories. "It will be as tough as 2015."
The shifts suggest a continued slow recovery from a 2011 nadir. But the activity at the National Business Aviation Association convention shows aircraft makers are not betting on weakness for long, and that a strong recovery is due by the end of the decade. Continued...